NARRBEGIN: Exhibit 11-10
Exhibit 11-10

-Exhibit 11-10 shows data on watch production. If the marginal resource cost is constant at $18 per unit of labor, how many workers should the firm hire to maximize its profit?

Question

NARRBEGIN: Exhibit 11-10
Exhibit 11-10
 
-Exhibit 11-10 shows data on watch production. If the marginal resource cost is constant at $18 per unit of labor, how many workers should the firm hire to maximize its profit?

Quizplus · Accepted Answer

To find the optimal number of workers, we need to compare the marginal revenue product (MRP) with the marginal resource cost (MRC). Looking at the chart, we see that at 3 workers, the MRP is $72 and the MRC is $18. In contrast, at 4 workers, the MRP is only $64, which is less than the MRC. Therefore, the firm should hire 3 workers to maximize its profit.

NARRBEGIN: Exhibit 11-10 Exhibit 11-10